LAS VEGAS (AdAge.com) -- In the midst of a Newspaper Association of America marketing conference that has presented a surprisingly upbeat view of how the embattled industry is adopting social networking and viral marketing, classified advertising remains a buzzkill.
"Normally in these sessions we talk about best practices," Charlie Diederich, the NAA's director-advertising, told an audience during a classified-ad workshop. "But we're talking about ideas that haven't been thought of yet."

Competing with Craigslist
Newspapers and their websites remain under siege by the likes of free online classified sites such as Craigslist, and, as a group, are still largely undecided about how to respond to the apparent devaluing of a category that was once among their top cash cows.

Case in point: The biggest news of the conference came from Tribune Co., publisher of the Chicago Tribune, Los Angeles Times and 10 other major metropolitan papers, which announced a plan to make all of its online general-merchandise classifieds free. Tribune is partnering with news site Topix.net.

Under the plan, Tribune will offer free general-classified ads through news aggregator Topix.net, which had earlier grown a number active message boards into its own classified community that now has a presence in every U.S. ZIP code. Topix -- backed by major publishers Tribune, Gannett and McClatchy -- earns its revenue via performance-based advertising, and, on the Tribune sites, that cash will be split between Topix and the publisher, although the breakdown was not disclosed.

'Drudge problem'
Topix VP Michael Markson said that while having to take its classifieds free might look like a setback, the deal gave Tribune both a new revenue stream and a solution to what he called the "Drudge Problem." That dilemma, he explained, is the situation faced by daily newspapers that get heavy out-of-market traffic on a single page, usually via a blog link or news site such as that of internet gossip Matt Drudge.

In the past, local papers didn't have local classified content to offer out-of-market visitors, but Topix' technology will "geo-sniff" the visitor's origins and offer classifieds from the visitor's home market. When a transaction occurs, Tribune will get a piece.

"[Tribune] saw where the market was going, so we didn't have to talk them into [going free]," Mr. Markson said during an interview. "But once they realized that free actually had some revenue to it, it became an easier sell."

The Tribune papers aren't the first to offer free classifieds, as many -- including some Tribune titles -- are already offering free general-merchandise ads in cases where the price of the item being sold is cheaper than a certain threshold (usually $250 or $500).

But the momentum of free conversions remains unsettling to some industry veterans. "Everybody's willing to give it away, and we need a strategy for what that means," Tom Hite, classified advertising manager at Oklahoma City's The Oklahoman, told attendees. "If we don't charge for it, I'm not sure anybody will."